Pingit, Barclays new service for sending money via smartphone, is seen as the next big thing in personal finance. Photograph: Ben Phillips/VisMedia

Barclays bank has launched Europe's first money-sending service that allows UK current account customers to send and receive cash through their mobile phones.

Barclays' 11.9 million current account customers can download the bank's Pingit app to their smartphone and start making instant money transfers to anyone with a UK-based mobile phone and a current account with any UK bank.

The app, which will be extended to all UK banking customers by early March, is free to use. It is aimed at an increasingly mobile-orientated public who use their phone to manage many aspects of their lives. Barclays says the service will enable users to make quick payments to each other – such as splitting a bill in a restaurant. It could also help some small traders, such as window cleaners, who need to collect payments from regular customers.

To send money via Pingit you need a smartphone handset – an iPhone, Blackberry and those using Android software; to receive payments you can use any handset. Users call the recipient's mobile number via the Pingit app, key in an amount between £1 and £300 and hit send. The money is moved between the two current accounts using the Faster Payments service, and takes as little as 30 seconds.

Antony Jenkins, chief executive of Barclays retail and business banking, said: "Barclays' Pingit could revolutionise the way people send and receive money. For friends splitting the cost of dinner, repaying a borrowed £10 or people sending money to a son or daughter at university, it is free, quick, convenient, secure, and easy to use. You can send and receive money in seconds without having to enter account details. I'm sure we'll soon be wondering what we did before it."

Barclays looks to have stolen a march on its competitors in what is expected to be the next big thing in personal finance – mobile phone-based financial payments. Last year, Visa, along with Telefonica (owner of O2) and Spanish bank La Caixa successfully trialled the use of contactless payments using the latest mobile handsets.

Residents of Sitges, near Barcelona, were given Samsung smartphones fitted with special sim cards and embedded bank cards which allowed them to make contactless payments at local businesses. The service is expected to be soon rolled out to a wider audience.